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In early March, the House of Commons industry and technology committee presented its report on Rogers Communications’ proposed $26-billion takeover of Shaw Communications. The findings were not binding, but the conclusions were stark.

A year earlier, in March of 2021, Rogers announced its Shaw deal. The two companies own largely non-competing cable and internet businesses on opposite sides of the country, so little concern was raised about that. But Rogers is also one of the Big Three wireless companies, along with Bell and Telus, and it gobbling up Shaw’s Freedom Mobile, an upstart No. 4, was identified as an obvious negative for consumers, in an industry marked by high prices and limited competition.

The Commons committee said it was “deeply troubled” by the state of telecom competition and was “especially worried” about the takeover’s impact on competition, given its already “fragile condition.” MPs called on the bodies reviewing the merger – the Competition Bureau, the federal Ministry of Innovation and the Canadian Radio-television and Telecommunications Commission – to “carefully consider” the implications, including on the prices Canadians pay.

Now is as good as time as any to remind everyone of the obvious: The cost of cellphone service in Canada is high. The Swedish consultancy Tefficient last July reported that Canadian telcos are leaders in how much revenue they make per gigabyte of data, and that (perhaps not surprisingly) Canadians use relatively little data compared with people in three dozen other countries.

The good news is that wireless bills have been inching down from previously egregious levels. Statistics Canada reported that prices in February had fallen 10.8 per cent compared with a year earlier, even as the rest of the economy was being hit with inflation. This is the difference competition, via companies such as Freedom Mobile, can have on the pricing power of the Big Three (who control nearly 90 per cent of the market).

In late March, the CRTC approved the relatively non-controversial TV side of the Rogers-Shaw hookup. But the Competition Bureau announced on Monday that it opposes the full deal – because of the potential loss of competition in wireless. After an investigation, the bureau concluded the deal “would substantially prevent or lessen competition in wireless,” drive up prices and result in poorer quality service. The commissioner of competition said opposing the merger was necessary, in wireless, to “preserve competition and choice for an essential service” and credited Shaw with bringing lower prices and more data to Canadians, “who pay some of the highest prices” in the developed world.

What’s next? Possibly an eventual full hearing at the Competition Tribunal; more likely a sale of Freedom Mobile. Rogers and Shaw are trying to sell the business – the companies on Saturday said they have “offered to address concerns” about wireless competition. An obvious buyer is Quebecor. Beyond the Quebec-focused telco, some earlier potential buyers appeared to lack size or industry experience.

The Competition Bureau is right that the outright loss of Freedom Mobile would be bad news for Canadians, as it would diminish competition. But Freedom Mobile going to relatively weak hands is also a major concern. Shaw was able to compete with Rogers, Telus and Bell. A lesser owner might not be able to. And that could mean Freedom Mobile merely vanishes later rather than sooner; the same result, only somewhat delayed. For a fourth wireless player to hold, and build, its position in the market – think of big investments in 5G – it needs to be in solid hands.

The long interregnum of this deal appears to already be hurting competition in Canada. The Competition Bureau argued that the normally active fight for customers between Rogers and Shaw has eased. In Shaw’s most recent quarter, December through February, it gained just 8,632 net new subscribers who pay monthly bills. That’s a fraction of the 75,069 such customers it won a year earlier.

Whatever the final mechanics of the Rogers-Shaw deal, what’s been underlined, over and over again, is the necessity of competition to lower wireless prices, and importance of a strong fourth player to deliver that competition. The Competition Bureau had to step in, but keeping Freedom Mobile in limbo for too long isn’t a great idea. As it hangs in the balance, it risks losing ground against bigger competitors who are bulking up and investing in 5G. Ottawa needs to get this decision right, and soon.

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